Casey’s General Stores Inc. on Friday, June 11, filed a complaint in the U.S. District Court for the Southern District of Iowa against Alimentation Couche-Tard Inc., alleging that Couche-Tard violated federal securities laws in connection with its unsolicited tender offer to purchase all of Casey’s outstanding shares for $36.00 per share in cash.
As announced on June 8, the Board of Directors of Casey’s determined that the offer substantially undervalues Casey’s and recommends that shareholders reject the offer and not tender their shares.
The complaint alleges a market manipulation scheme perpetrated by Couche-Tard in an attempt to acquire all outstanding shares of Casey’s stock at an artificially deflated price. As described in the complaint, prior to April 9, 2010 (the date that Couche-Tard made public its offer to acquire Casey’s), Couche-Tard had accumulated a stake of 1,975,362 Casey’s shares, which represented approximately 3.9% of the issued shares of Casey’s. Shortly after Couche-Tard made public its offer of $36.00 per share on April 9, it sold almost all of its shares at a price of $38.43 per share. The 1,975,000 shares sold by Couche-Tard on April 9 represented 17% of the total trading volume in Casey’s stock during market hours on that day.
By announcing its intent to acquire Casey’s in a hostile takeover – and then selling nearly two million shares of Casey’s stock on the open market – Couche-Tard simultaneously reaped millions of dollars of profit by trading on the market’s reaction to its own announcement and artificially depressed the run up in Casey’s stock price that otherwise would have followed Couche-Tard’s announcement of its takeover bid.
Casey’s is seeking:
-a declaration that Couche-Tard’s April 9th, 2010, sale of Casey’s stock with the intent to artificially depress the market price of Casey’s stock was in violation of Section 10(b) of the Exchange Act, and Rule 10b-5 promulgated thereunder;
-a declaration that Couche-Tard’s April 9th, 2010, announcement of its intention to make a tender offer for Casey’s shares, without disclosing the fact that it held nearly two million shares of Casey’s stock and intended to sell its Casey’s holdings after its announcement in order to reap illicit profits and to artificially depress the market price of Casey’s stock, was in violation of Section 14(e) of the Exchange Act, and Rule 14e-8 promulgated thereunder;